Tariff Escalation

Customs

Higher tariff rates on processed goods than on raw materials, discouraging industrialisation in developing countries.

Sources

1. World Trade Organization — Glossary: a guide to “WTO speak” wto.org accessed 23 September 2026

The WTO defines this as “a situation where relatively higher imports duties are applied on processed products compared to those on the corresponding raw products, e.g. higher import duties on chocolate than on cocoa”. Its glossary is unusually direct about the effect: the practice “protects domestic processing industries and discourages the development of processing activity in the countries where the raw materials originate”. That is the whole development argument in a sentence. A country exporting cocoa faces a low duty; the same country exporting chocolate faces a high one, so the value-adding step is priced out of the producing economy and into the importing one. Escalation is therefore not a technical curiosity of tariff schedules but a structural obstacle to moving up a value chain.

What a glossary settles, and what it does not. The WTO’s glossary is the organisation’s own plain-language guide to its vocabulary, so it is authoritative for what the term means in WTO usage. It is not the legal text. Where an obligation is at stake, the operative words are in the agreement the glossary points to — GATT, GATS, TRIPS and the rest — and those are what a panel would read. Use the glossary to know what is being discussed, and the agreement to know what is owed.

Related terms

• Advance Authorisation
• Anti-Dumping Duty
• ATA Carnet
• Authorised Economic Operator
• Bill of Entry
• Binding Tariff Information

From the AJG lexicon archive (July 2026).